Make knowing your customers your resolution for 2014
The best measure of how well you know your customers is the extent to which customer data is reflected in your business strategies. Where do you stand?
Possibly the best outcome of the new Know Your Customer(KYC) norm for sectors such as telecom, travel, financial services and banking, is it has blown the lid off the usefulness of customer data to drive business decisions.
In the telecom sector for instance, today, it is a must to collate proof of customer identity prior to issuing a new connection. So, mobile telephony companies are collating Aadhar cards or some such other identity and address proof document for all of their customers. In doing so, yes, they are meeting the prescribed KYC regulations. But how well do they really know their customers?
In business, you only truly know your customers when you can convert knowledge about them into winning business strategies. Merely filing away customer’s IDs doesn’t do anything for your top lines or bottom lines. “Out of sight, out of mind” customer data is left out of consideration when making decisions. Whereas customer data starts to yield returns only when it is juiced, and the essence extracted thereof is used to formulate business strategy.
Aware of the usefulness of customer data, smart marketers are kick-starting their businesses data usage curve in analysing the information they have access to post KYC. Some telecom marketers now with access to genuine addresses of their pre-paid subscribers are analysing this data to determine customers geographic spread and identifying under served locations in terms of top up booths. By acting upon this information and filling in the gaps they are boosting sales.
Great business benefit ensues from gaining insights from customer data and acting on these.
Climb the data usage curve
Thanks to KYC, marketers have greater support to climb the customer data usage curve. Using location (address) and demographic data makes a good start. A step up the ladder is to pull the available customer transaction and behavioural data from the sales and customer service departments. Still more useful is to acquire psychographic data representing customers’ interest areas, aspirations, passions, etc. Clearly, this info can only be gleaned by getting into the mind of customers—an elaborate exercise, no doubt. But it is a must if you wish to enjoy the big pay-offs that accrue from customer data—getting maximum bang for your limited marketing bucks by knowing exactly what products and services to pitch to which customer, when and in what customised form.
So how does customer data talk to you? Say you are a marketer for a bank or financial institution. To know to which of your customers you should make offers for loans or investment plans, you must have a handle on customers demographics—their educational background; employment details, including the income bracket they fall in; their marital status and the size of their family; and their current investments. Transaction data for banks and financial institutions is represented by customer’s credit card usage and savings and current accounts balances. It can tell you about customers spending patterns and spare funds position—in short, who might need a loan. Running surveys on customers can help understand their aspirations and collate valuable psychographic data. By putting together relevant bits of demographic, transaction and psychographic data you can build customer profiles—a risk profile showing customer s to who it is safe (from the repayment point of view) and sensible (from the perspective of their socio-economic background) to make offers for low-end finance products, an investment profile showing customers (holding high paying jobs) who are likely to take you up on offers for big loans(to buy that coveted Mercedes).
What constitutes useful customer demographics, transaction and psychographic data varies per industry. In the travel industry, knowing customers demographics means knowing their family size, employment details and family location (such as if they have children studying in Australia or the US).Transaction data is constituted by past travel records—business and leisure destinations frequented, preferred travel class, properties stayed in, meal plans etc. Customers travel interests, such as historical, beach and adventure destinations comprise psychographic data. With this data in hand travel marketers can identify prospective destinations customers may be interested in, for which offers can be made in their preferred class of travel.
So it goes per industry—you get the drift. Arguably, marketers from some sectors will find it more challenging to get to know their customers. Apparel and lifestyle retail for instance is a tougher ballgame because style must be factored into the consumption equation. Style and taste are less rational than other aspirations, hence harder to predict. Apparel and lifestyle marketers must put more weight on psychographic data than on customers’ demographics and transaction data.
Big customer data as it is called takes some analytics but it is a proven game changer. McKinsey Research shows that personalisation can deliver five to eight times the ROI on marketing spend and lift sales 10% or more. But there’s a big caveat to walking this route. Getting your hands on customer data is a privilege. Individuals’ privacy must be protected at all costs—to avoid being hauled up by regulatory bodies and more importantly, to ensure customers don’t get cheesed off. Overdone targeted marketing rubs customers the wrong way (those pesky telemarketers…).
Nevertheless customer data is intelligence at your disposal. Crack it to know what customers want. Then deliver accordingly. How’s that for a New Year resolution?